Ethereum (ETH) Whales Offload Holdings as ETH Burn Rate Hits Yearly Low

Recent activity in the Ethereum (ETH) market has drawn attention to large-scale transactions by ETH whales, signaling a shift in their behavior amid ongoing price fluctuations and market uncertainties. These transactions, involving substantial amounts of ETH, have raised questions about the potential impact on Ethereum’s price and the broader market sentiment. 

According to LookOnChain, an on-chain intelligence platform, one striking instance involves a whale who purchased ETH at $1,890 last year and recently moved 12,906 ETH ($24.39 million) from Binance to Lido.

The whale later withdrew 7,000 ETH from Lido, redepositing it onto Binance, realizing profits exceeding $16 million. These actions suggest a trend of profit-taking among whales, indicating a cautious approach to Ethereum’s future price movements.

Analysis of on-chain also data reveals a decrease in the number of large transactions, coinciding with periods of price volatility for Ethereum. This correlation suggests that whale activities could be influencing the price dynamics of ETH. The decline in total volume of large transactions during price instability indicates a possible reevaluation of risk tolerance among ETH whales.

ETH Burn Hits Yearly Low

Recent data shows that Ethereum experienced a significant drop in ETH burned on Sunday, May 5th, hitting a yearly low of 610 ETH. This decline in ETH destruction is attributed to lower network fees, with current gas fees ranging from 5 to 10 gwei, a substantial decrease from earlier in the year.

Typically, Ethereum’s daily burn rate ranged from 2,500 to 3,000 ETH between January and April. The decrease in fees has reduced ETH burned, as fees directly impact the amount of ETH destroyed, a mechanism aimed at reducing the overall supply and potentially boosting its value.

The recent decline in ETH burn has shifted the dynamics of Ethereum’s network from its previous deflationary model. The London hard fork, implemented in August 2021, altered Ethereum’s fee mechanism, linking higher fees to increased ETH removal from circulation through burning.

Recent developments suggest a shift towards inflationary pressures on Ethereum’s supply. Data from ultrasound.money indicates a current supply growth rate of 0.49%. However, this trend could reverse if the amount of ETH burned exceeds the amount issued, returning Ethereum to its previous deflationary state.

Ethereum’s Price Performance

Ethereum’s relative underperformance compared to other major cryptocurrencies has contributed to whales reassessing their holdings. While Ethereum’s price movements have not been extreme, the slower growth rate compared to its counterparts may be prompting whales to explore alternative assets or diversify their portfolios.

Ethereum recently surpassed the $3,200 resistance level, reaching $3,221 on Binance. However, as of this writing, the price has slightly declined to $3,108. While Ethereum’s price tends to move in sync with Bitcoin, it also experiences more significant declines than BTC.